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Small Business Loan Funding Imminent From Congress

Posted on Apr. 21, 2020

A small business loan program is expected to be replenished as lawmakers continue to haggle over additional funding for states, healthcare workers, and hospitals.

The Senate may vote to boost funding for the Paycheck Protection Program (PPP) April 21 after negotiations over an interim package while the fund was running low stalled. Senate Majority Leader Mitch McConnell, R-Ky., blamed Democrats in a pro forma session April 20.

“At this hour our Democratic colleagues are still prolonging their discussions with the administration, so the Senate regretfully will not be able to pass more funding today,” McConnell said on the Senate floor. The House could take up the bill April 22, according to House Majority Leader Steny H. Hoyer, D-Md.

Lawmakers are negotiating to approve $300 billion in additional funding for the PPP, which was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), and $100 billion to improve coronavirus testing and help hospitals with treatment, according to Treasury Secretary Steven Mnuchin. The package would also include $60 billion for the Economic Injury Disaster Loan Emergency Advance program. But Democrats have been pushing for aid to local governments.

An earlier proposal introduced by Maryland Democratic Sens. Benjamin L. Cardin and Chris Van Hollen would add $150 billion for states and municipalities.

PPP Problems

The small business loan program ran out of funding last week and has come under criticism over how the money has been allocated.

“I am concerned that many businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses,” Sen. Rick Scott, R-Fla., said in a statement.

Senate Democrats asked Mnuchin and Small Business Administrator Jovita Carranza for more statistics on who has been receiving the loans.

Several large businesses have been able to benefit from the loan program, while smaller businesses have been shut out. Fast food restaurant chain Shake Shack, which has a $1.75 billion market cap with 185 locations in the United States, said it is returning the $10 million PPP loan it was able to secure from the government.

Shake Shack CEO Randy Garutti and its founder and board chair, Danny Meyer, leveled criticism at the PPP for being severely underfunded and questioned why it applied to restaurants with under 500 employees per location, saying in a statement that “few, if any restaurants in America employ more than 500 people per location.”

Maybe Next Round

A bipartisan proposal from Senate Finance Committee members Robert Menendez, D-N.J., and Bill Cassidy, R-La., would provide states and localities with $500 billion in aid. Menendez told reporters during a conference call April 20 that the measure, to be introduced when the Senate reconvenes, could be included in the next coronavirus relief package after Congress agrees to replenish the PPP fund.

The Menendez-Cassidy bill comes after a request by the National Governors Association urging Congress to help states deal with the coronavirus crisis. Cities may soon be forced to raise property taxes to help fund essential services.

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